The future of the the charitable voluntary and community sector is at risk because it has become divorced from grassroots activism and community work, according to the chief executive of Community Action Southwark.

Anticipating a study from the National Association for Voluntary and Community Action, Gordon McCullough said the future for community action organisations "doesn't look good". "Community infrastructure has to understand what it's trying to help do. It's a fundamental question about what it's trying to achieve and can it show the difference it makes."

Speaking at a Guardian seminar discussing building social capital in areas of need, supported by New Philanthropy Capital, McCullogh suggested the relationship between councils and voluntary groups who receive grant for delivering public services may have distorted the sector's original aims.

"The local authority has a very paternalistic attitude towards the voluntary sector. There is a dependency that's built up, and what we're trying to do is help organisations break that dependency," McCullogh said. He described voluntary organisations as being seduced by statutory funding.

"The CVS is adrift from the grassroots and they tend to be silent around issues such as welfare reform," he said. "There isn't that voice. We have been seduced. The more fundamental questions aren't being asked. That seduction is diminishing voluntary and community action."

He added: "There is a freedom about losing that funding if you can survive. That's a freedom to move towards voluntarism and activism."

Stephen Hammersley told delegates that while community and voluntary organisations can build local social capacity, they can also have the opposite effect. "I do wonder how much social capital the sector destroys," he said, adding that the tendency to compete against each other in a "winner takes all" fight for scarce funding and working in organisational silos exacerbated divisions within communities rather than bringing people together.

Another problem faced by community infrastructure groups is encouraging people to get involved from the poorest areas, and engaging new faces. "I wouldn't underestimate the difficulty," warned Debbie Ladds, chief executive of Local Trust. "In some of the communities we talk to you will get the usual suspects, a few people who always get involved. But if the issues that arebeing addressed matter to people they will come forward."

Despite huge social and political shifts over the last decade, data presented by Department for Communities and Local Government policy analyst Maria O'Beirne showed that the common measures of social capital – volunteering rates, for example – had stayed static over that period.

Little had changed in recent years also, despite the introduction of the Localism Act by the coalition government to give communities new rights over local assets and tools to make use of their influence. The panel agreed there was little understanding or interest in these new powers on the ground within communities, especially in the most deprived areas.

Dan Corry, chief executive of New Philanthropy Capital, said it was easy for politicians to leap to conclusions about a solution to the problem of building social capital. "Governments that want to do something on this sometimes rush out and do the wrong thing but that's because it's very difficult," he said.

But McCullough said assessing success against historic community engagement would suggest failure, when in fact voluntary groups were working towards a new kind of community engagement suitable for today's society.

"We're trying to measure it against a time when there was a community and those bonds between people. We're in an entirely different time. It's not about looking at what it used to be, but trying to understand what, as a society, we need to do to make everybody's lives better."

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